Forget Naspers or Richemont — the clear investment winner for this year has been bitcoin, the unfathomable cryptocurrency that has risen 2,346%, from about R14,000 apiece in January to about R300,000 today.
Remarkably, almost to a man, SA’s established investment experts have recommended steering clear of bitcoin, citing the (obvious) fact that there’s nothing backing it and that the stratospheric rise has all the hallmarks of a classic bubble. Yet investors would have been fabulously rewarded for ignoring those experts.
Of course, "investors" isn’t exactly the right word. "Speculators" would probably be more accurate, as they’re only buying it hoping they can sell it for more later.
But is it really a bubble? It’s hard to say at this point. Certainly, the trade in bitcoin isn’t driven by fundamentals — there are none — but rather by the classic pathological weakness in investing: the fear of missing out.
The Economist this week said bitcoin doesn’t raise much systemic risk, pointing out there’s no sign that it is being widely purchased with borrowed money. "Bitcoin could be worth US$10 or it could be worth $10,000," the magazine said.
The fact is, no-one knows. But as long as the thousands of South Africans ploughing their money into bitcoin are aware they could lose it all, perhaps the fallout of a collapse will be limited.